VietNamNet Bridge - The names of the biggest debtors have not
been revealed. However, an official of the National Finance Supervision Council
has affirmed that most of the bad debts are being incurred by two subjects –
state owned enterprises and private “big guys.”
In a report released recently by
the State Bank’s Inspection Agency, the bad debt (irrecoverable debt) ratio may
reach 8.6 percent, or about 200 trillion dong.
According to Thoi bao Kinh te
Vietnam, by March 31, 2012, state owned banks’ bad debt ratio had reached 50.5
percent. Meanwhile, the ratios were 27.8 percent for joint stock banks, 4.2
percent for foreign banks and 17.5 percent for other credit institutions.
However, the names of the biggest
debtors, which have created the “blood clots” causing the “traffic jam” in the
national economy remain unknowns. On the TV program “People ask – Ministers
answer” broadcasted in early July, Minister of Planning and Investment Bui
Quang Vinh cited the figures from the Ministry of Finance as saying that state
owned enterprises had incurred the debt of 1,008,000 billion dong, while their
stockholder equity is 790,000 dong.
On average, the ratio of debt on
stockholder equity of state owned enterprises is 1.36. However, of the state
owned enterprises, 30 enterprises have the debts three times higher than the
stockholder equity.
The Truong Son Construction
Corporation, for example, has the debt higher by 9.19 times than the
stockholder equity. The figures were 4.79 for Licogi, a construction and
infrastructure development corporation, 4 for HUD, 3.83 for the Electricity of
Vietnam EVN and 3.12 for Vinalines, a shipping firm.
The figures account for nearly 50
percent of the total outstanding loans provided by the whole banking system
(2.5 million of billions of dong).
There has been no official report
about the actual debts incurred by state owned enterprises. Dang Van Thanh,
Deputy Chair of the Vietnam Accountants’ Association, also said that the debts
incurred by state owned enterprises are very complicated and it’s very
difficult to reckon up the debts.
However, the bad debts are
believed to increase in 2012, when enterprises face bigger difficulties which
make them exhausted.
Analysts have warned that a lot
of debts, in debt classification, would be transferred into other groups of
debts with higher risks. Meanwhile, according to Cao Sy Kiem, former Governor
of the State Bank, up to 70 percent of the banks’ bad debts are being incurred
by state owned enterprises, while the debt incurred by private businessmen just
amounts to a small proportion.
The second biggest debtor,
according to the official of the National Finance Supervision Council, is the well-known
big guys, including the ones whose names appeared in the list of the top stock
millionaires.
“The big guys mostly borrowed
money to develop real estate projects, The loans could be hundreds of billions
of dong or tens of trillions of dong. However, since the real estate market has
got frozen, the capital has also been buried under the buildings, and the big
guys cannot take back the investment capital to pay bank debts,” the official
said.
“I know a big guy, who borrowed
the huge sum of 4 trillion dong to develop a high rise building in HCM City.
However, since there has been no leasers, he does not have money to pay debts,”
he added.
Meanwhile, Kiem has attributed
the big bad debt ratio of state owned enterprises to the banks’ carelessness in
inspecting the feasibility of the enterprises’ projects. Commercial banks all
believe that state owned enterprises are backed by the state and they would be
able to pay debts. Therefore, the banks skipped a lot of necessary examination
steps, lending to the enterprises with easy conditions.
Kim Chi
Business & Investment Opportunities
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